UK Energy Market Report — 13 September 2026

What we’re watching today

• Renewables Obligation spending for Q2 2026 and heat‑pump deployment data signal accelerating decarbonisation.
• New UK ETS policy overview and offshore oil‑gas legislation could reshape compliance costs.
• Gulf geopolitical risk and US rig activity are the headline drivers of near‑term wholesale price volatility.

Headlines and what they mean

Renewables Obligation to Exchequer Scheme Expenditure: 1 April to 30 June 2026

The Department for Energy Security and Net Zero reports that £1.2 bn was allocated to the Renewables Obligation scheme in Q2, a 15 % increase on the same period last year. This boost underlines the government’s commitment to meeting the 2030 renewable target and may translate into more renewable contracts for large‑scale buyers, potentially stabilising long‑term power costs. source

Heat pump deployment statistics: June 2026

June figures show 42,000 new heat pumps installed, a 9 % rise month‑on‑month, reflecting the impact of recent incentive schemes and the growing corporate shift away from gas heating. For commercial sites, the trend suggests a widening market for heat‑pump procurement and the need to plan for associated electricity demand. source

UK Emissions Trading Scheme (UK ETS): policy overview

The latest policy overview outlines tighter caps for 2027‑2030 and introduces a price‑floor of £70 / tCO₂. Companies will face higher compliance costs unless they secure forward contracts or invest in low‑carbon assets now. The change reinforces the value of flexible procurement strategies such as those offered by TUS, which currently manages over 150 GWh under flex management, delivering +20 % versus supplier forecasts. source

Oil and gas: offshore environmental legislation

New offshore legislation tightens discharge limits and mandates real‑time emissions monitoring for all UK‑licensed platforms. While primarily affecting upstream operators, the rules could increase upstream costs that are ultimately passed through to downstream electricity and gas prices. Stakeholders should review contract clauses for pass‑through provisions. source

Minister McCluskey speech on AI for clean energy vision

Minister McCluskey highlighted a £200 m AI research fund aimed at optimising grid balancing and demand‑side response. The initiative promises smarter load management, which could lower peak‑price exposure for large energy users if they adopt AI‑enabled platforms. source

Heat Network Efficiency Scheme (HNES): Round 13 applications open

Round 13 of the HNES opens with £350 m of funding for district‑heat upgrades, targeting high‑efficiency heat‑pumps and thermal storage. Commercial estates with existing heat networks should consider applying to reduce operating costs and meet sustainability targets. source

Geopolitics and global markets

Tensions in the Gulf are intensifying after Iran’s war‑like posture and drone strikes on Saudi Arabia’s East‑West pipeline, pushing super‑tanker rates to $800,000 a day and threatening oil flow reliability. The IEA now projects a 5.7 million bpd plunge in Gulf oil supply by 2027, adding to price pressure. Meanwhile, US oil rigs are increasing as crude tops $100, signalling higher global demand that can lift Brent and, by extension, UK wholesale power prices. source source source source

The view from the trade desk

The grid is forecast to run at a moderate carbon intensity of 154 gCO₂/kWh today. Gas remains the largest generator at 31.8 %, followed by imports (22.3 %) and nuclear (18.9 %). Renewables – wind, biomass and hydro – together supply just over 27 %, indicating room for further decarbonisation. Buyers with flexible contracts can benefit from the modest intensity while hedging against the volatility driven by the geopolitical backdrop.

What to do this week

• Review existing power contracts for exposure to the upcoming UK ETS price‑floor and consider forward‑price hedges.
• Evaluate eligibility for Heat Network Efficiency Scheme Round 13 to fund district‑heat upgrades.
• Incorporate the latest heat‑pump deployment data into your decarbonisation roadmap and assess electricity demand impacts.
• Monitor Gulf shipping news for any escalation that could affect oil‑linked power price benchmarks.
• Engage with AI‑enabled demand‑response providers to leverage the new government AI fund.

Bottom line

Regulatory momentum is accelerating renewable funding, heat‑pump adoption and AI‑driven grid optimisation, while Gulf geopolitical risk and rising US oil production keep wholesale power prices volatile. With a moderate carbon intensity forecast and a generation mix still dominated by gas, commercial buyers should lock in price certainty where possible and explore flexibility solutions to navigate the evolving risk landscape.